NORWEGIAN GAS DEVELOPMENT REPORT NO. 2

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T00109R000100130009-8
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: December 7, 2010
• Sequence Number: 9
• Publication Date: July 8, 1982
• Content Type: CABLE

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RUDKSNQ/AMEMBASSY OSLO 7570
RUDKGPQ/AMEMBASSY THE HAGUE 6399
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C 0 N F I D E N T I A L PARIS 23403
E.O. 12065: GDS 7/8/82
TAGS: ENRG, UK, NO, NL
SUBJ: NORWEGIAN GAS DEVELOPMENT REPORT NO. 2
EXDIS
1. (C - ENTIRE TEXT)
2. AFTER READING SOME PUBLISHED MATERIAL AND THINKING
A BIT I HAVE BEGUN TO FORMULATE IN MY MIND A SPECIFIC
PROJECT WHICH MIGHT MAKE COMMERCIAL SENSE AND COULD
SOLVE OUR POLITICAL PROBLEMS. I BELIEVE IT FUNDAMENTAL
TO THE SUCCESS OF MY MISSION THAT ANY PROJECT MUST
MAKE COMMERCIAL AND TECHNOLOGICAL SENSE. ALL GOVERN-
MENTS CAN HOPE TO DO, AT BEST, IS TO EASE ASIDE POLITICAL
OBSTACLES TO AN OTHERWISE COMMERCIALLY VIABLE PROJECT.
WE NEED WILLING BUYERS AND SELLERS AROUND WHICH A
PROJECT CAN BE BUILT. I TRAVELLED TO LONDON LAST WEEK
AND MET WITH REPRESENTATIVES OF SHELL (ROBERT HART,
ANDRE BENARD, JAN KLOOTWIJK, IAN MCGRATH, AND FLORIS
OUWEHAND),
ROBERT BELGRAVE OF CHATHAM HOUSE
AND CLIVE JONES ET AL AT THE DEPARTMENT OF ENERGY.
THE MEETINGS WERE VERY EDUCATIVE AND ENCOURAGING.
3. THE PROJECT I THINK WE SHOULD NOW PURSUE WOULD
INVOLVE COOPERATION BETWEEN OWNERS OF THE NORWEGIAN
GAS AND GASUNIE IN THE NETHERLANDS. THIS WOULD
NECESSITATE COOPERATION BETWEEN THE NORWEGIAN AND
DUTCH GOVERNMENTS. THE FOLLOWING FACTORS, INTER ALIA.
MUST BE CONSIDERED:
(A) WE HAVE WILLING BUYERS IN EUROPE, DESPITE THE
FACT THAT WE ARE IN A BUYERS MARKET AND MAY REMAIN
SO FOR SEVERAL YEARS. GAZ DE FRANCE AND RUHRGAS MIGHT
NEGOTIATE NOW, AT LEAST ON A FORMULA BASIS, FOR
DELIVERIES IN THE 1990'S. THIS WOULD GIVE A BASE TO THE
PROJECT.
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(B) IT IS UNLIKELY THAT THE LARGE NEW NORWEGIAN
RESERVES WILL BE AVAILABLE TO EUROPE BEFORE THE 1990'S.
THE NEW GAS PIPELINE FOR STATFJORD IS SCHEDULED FOR
COMPLETION IN 1985, BUT THIS IS NOT A LARGE ENOUGH
SOURCE TO SUPPLY EUROPE A NEW TRANCHE.
SLEIPNER WILL PROBABLY BE THE NEXT NORWEGIAN FIELD
BUT IT IS NOT IN ITSELF AN ALTERNATIVE TO SOVIET
GAS AND IT PROBABLY IS UNWISE TO COUNT ON DELIVERY
OF SLEIPNER GAS BEFORE 1991. BLOCK 31/2, TROLL
AND THE SURROUNDING AREA PROBABLY WON'T BE READY
BEFORE 1995. THIS IS A HUGE FIELD, HOWEVER AND
REPRESENTS AN ALTERNATIVE TO ADDITIONAL SOVIET GAS.
(C) UNDER CERTAIN CONDITIONS THE DUTCH WOULD BE
ABLE, INDEED MIGHT BE ANXIOUS, TO EXPORT ENOUGH
ADDITIONAL GAS DURING THE 1985-1990 PERIOD TO
COMPENSATE FOR ANY DELAYS IN THE DELIVERY OF
CONTRACTED FOR SOVIET GAS AND TOGETHER WITH SLEIPNER
AND OTHER AREAS MEET THE EUROPEAN DEMAND UNTIL TROLL
IS READY IN THE MIDDLE 1990'S.
(D) BRITAIN WITH ITS RELATIVELY HIGH CONSUMPTION
OF PREMIUM GAS IS NOT APT TO BE A MAJOR INTERIM OR
LONG RANGE EXPORTER OF GAS, DESPITE ITS INTENTION
TO DEVELOP NEW GAS RESERVES.
4. THE PLAN WOULD BE FOR THE DUTCH TO INCREASE THEIR
EXPORTS THROUGH THE 1980'S. THIS WOULD SUIT THE DUTCH
NEED FOR INCREASED EARNINGS. TO MEET THEIR LONG RANGE
NEEDS INTO THE 21ST CENTURY WE WOULD TRY TO BRING
NORWEGIAN TROLL GAS INTO HOLLAND FOR STORAGE AND DISTRIBU-
TION INTO EUROPE. SOME OF THE EARNINGS FROM THESE EX-
PORTS COULD BE PUT IN AN INTEREST EARNING RESERVE AND
BE USED TO PAY FOR FUTURE PAYMENTS FOR NORWEGIAN GAS.
TO AGREE TO THIS SCHEME THE DUTCH WILL PROBABLY REQUIRE
THAT A PIPELINE BE BUILT TO HOLLAND FROM NORWAY WATERS.
IT MIGHT GO IN THE FIRST INSTANCE INTO HOLLAND FROM
EKOFISK WITH A LINK TO SLEIPNER AND EVENTUALLY TO TROLL.
THE POSSIBLE VARIATIONS IN THIS PIPELINE CANNOT BE IN-
TELLIGENTLY DEALT WITH HERE AND NOW BUT WE WILL NEED SOME
SORT OF MAJOR PIPELINE PLAN LINKING NORWAY AND HOLLAND.
5. THERE ARE A MYRIAD OF PROBLEMS TO SOLVE: THE QUALITY
OF NORWEGIAN GAS CAN BE DIFFERENT FROM DUTCH GAS; THERE
ARE DIFFERENT OWNERS IN DIFFERENT FIELDS; WHO BUILDS THE
DUTCH-NORWEGIAN PIPELINE AND WHERE ARE THE MATERIALS
PROCURED, ETC. ETC. BUT WE DO HAVE THE RUDIMENTS OF
A DEAL. GAS PURCHASE CONTRACTS CAN BE MADE TO FORM A
CREDIT BASIS FOR THE PAYMENT OF A NEW PIPELINE AND THE
DEVELOPMENT OF THE NORWEGIAN GAS FIELDS.
6. NONE OF THIS WOULD RUN COUNTER TO THE PRESENT TIMING
OF THE NORWEGIAN GOVERNMENT. THE OIL MIGHT BE FIRST
TAKEN OUT OF TROLL AND THE GAS BE PHASED IN AT A
REALISTIC RATE. NOR WOULD THIS PLAN PRECLUDE A NORWEGIAN
TIE-IN WITH THE BRITISH AT FRIGG AND A LAND-BASED
PIPELINE DOWN THROUGH BRITAIN WITH A LINK DIRECTLY TO
FRANCE, WHICH BOTH THE BRITISH STEEL CORPORATION AND
FRANCE WOULD LIKE TO SEE HAPPEN. NOR WOULD IT PRE-
EMPT THE EUROPEAN MARKET FROM ALGERIA (IT WOULD TEND
TO KEEP THE ALGERIANS IN LINE) OR OTHER SUPPLIERS OF LNG.
THERE WILL BE SOVIET GAS IN EUROPE BUT THE PLAN COULD
TAKE UP THE SLACK CAUSED BY DELAYS IN THE FIRST YAMAL
PIPELINE AND PREEMPT A SECOND YAMAL LINE.
7. I THINK THE NEXT STEP SHOULD BE TO TALK TO THE DUTCH
AND IF THEREBY ENCOURAGED THEN TALK TO THE NORWEGIANS
PERHAPS WHEN THEY ARE IN WASHINGTON AUGUST 16 TO 18.
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MEANWHILE I THINK IT IMPORTANT WE STOP LEANING ON THE
NORWEGIANS TO DO SOMETHING THAT IS IMPRACTICABLE. ALSO
WE SHOULD NOT DISCUSS THIS SCHEME UNLESS AND UNTIL WE
ARE ENCOURAGED BY THE DUTCH. PERHAPS OUR EMBASSY IN OSLO
COULD BE ASKED TO DENY ACCESS TO THEIR CLIENT BY
WANDERING AMERICAN OFFICIALS. I SUSPECT EMBASSY OSLO
IS BEST EQUIPPED TO SUPERVISE ANY NEGOTIATIONS WITH THE
NORWEGIANS AND I HOPE THE EMBASSY WOULD BE REPRESENTED
IN WASHINGTON AUGUST 16 - 18.
8. ALL OF THIS MAY TURN OUT TO BE HAIRBRAINED, BUT IT
IS A START AND IT MAY GIVE RISE TO SOMETHING, PERHAPS
TO SOMETHING ELSE WE DO NOT NOW UNDERSTAND OR KNOW ABOUT,
BUT TRIAL AND ERROR IS OFTEN THE BEST WAY TO GO.
GALBRAITH
END OF MESSAGE
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